Antitrust Law Daily Wrap Up, CONSUMER PROTECTION NEWS: Operators of mass telemarketing scheme settle FTC charges of deceptive practices, (Feb 3, 2015)
Organizations Mentioned:1164047236 Quebec, Inc. | 1166519075 Quebec Inc. | Bureau of Consumer Protection | First Consumers, LLC | PowerPlay Industries LLC | Standard American Marketing Inc.
By Linda O’Brien, J.D., LL.M.
Two corporate directors who participated in an alleged multi-million dollar fraudulent telemarketing scheme that targeted U.S. seniors and withdrew money from their accounts without authorization have agreed to settle FTC charges of deceptive practices, the agency announced today. The proposed settlement orders bar them from using remotely-created checks drawn on consumers’ bank accounts, require them to obtain consumers’ consent before debiting their accounts, and prohibit them from misrepresenting any goods or services (FTC v. First Consumers LLC, File No. 132-3291).
According to the FTC complaint, company president Ari Tietolman and his associates established a network of U.S. and Canadian entities to carry out their scam. The defendants used a telemarketing call center in Canada, where Tietolman lives, to cold-call seniors claiming to sell fraud protection, legal protection, and pharmaceutical benefit services for $187 to $397.
In some instances, the telemarketers convinced consumers they were affiliated with banks or government entities, leading consumers to disclose their bank account information. The defendants then used that information to create checks drawn on the consumers’ bank accounts. They deposited these “remotely created checks” into corporate accounts set up by company directors Marc Ferry and Robert Barczai in the United States. The U.S.-based defendants then transferred the money to accounts in Canada, the FTC alleged. The Commission charged the corporate and individual defendants with violating the FTC Act and the agency’s Telemarketing Sales Rule.
The complaint was filed in the U.S. District Court for the Eastern District of Pennsylvania in March 2014. The court entered a temporary restraining order, halting the operation pending resolution of the FTC action.
Two defendants in the case, Ferry and Barczai, have agreed to proposed stipulated orders settling the FTC’s charges against them. The order against Ferry bans him from using remotely created checks and payment orders, requires him to get consumers’ authorization before charging their financial accounts, and prohibits him from making misrepresentations regarding any goods or services. It imposes a judgment of $325,449 against him, which will be partially suspended after he pays the FTC $68,412.
The order against Barczai contains the same conduct provisions as the order against Ferry, and imposes a judgment of $9,655,638, which will be partially suspended after he pays the FTC $21,367.
Ferry and Barczai also will turn over the proceeds of the scheme from their personal and corporate accounts. The FTC has filed for default judgments against the corporate defendants, and summary judgment against the leading individual defendant in the scheme, which took in nearly $11 million between 2010 and March 2014.
“Scammers thought they could cover their tracks by operating across borders, but law enforcement caught up with them,” said Jessica Rich, Director of the Bureau of Consumer Protection. “We’ve shut down their scheme of lying to older people and stealing their money.”
The Commission vote approving the two proposed stipulated final orders was 5-0.
Companies: First Consumers, LLC; Standard American Marketing Inc.; PowerPlay Industries LLC; 1166519075 Quebec Inc.; 1164047236 Quebec, Inc.
News: ConsumerProtection FederalTradeCommissionNews